Yummy Brands is considering the purchase of a new machine that dispenses yogurt. The machine cost $500,000. Annual revenues and expenses associated with the new machine follow:

Sales revenue		$325,000
Operating expense	$30,000
Advertising	60,000
Operator salaries	32,000
Ingredients cost	60,000
Maintenance contract	20,000
Depreciation	40,000

You have been hired as Yummy Brands chief financial officer and you need to advise the company CEO if the company should invest in this machine. Show your analysis/ calculations in good form for all yourrecommendations:

A. In your meeting with the CEO you find out that the company usually does not like to invest unless if a project promises a payback period of 4 years or less. Should the company invest in this machine? Show your calculations in good form and explain the pros and cons of this method to make this decision.

B. Another approach that the CEO encouraged you to explore is the simple rate or return. Assumingthat Yummy Brands requires a 15 percent on all equipment purchases, compute the simple rate of return promised by the new machine. Ignore income taxes.

C. The CEO said he would be interested to find out about any other methods that should be used in this analysis. In the recent Yogurt Journal he had read something about using the internal rate ofreturn of a particular investment in making an investment decision. As a recent graduate of managerial accounting you are expected to be familiar with this analysis and you should do the calculations and and make a recommendation based on this method.

D. This is your first assignment to make a recommendation about a significant financial investmentand you want to be assured that you are making the correct recommendation. You are also trying to impress your boss with your knowledge of managerial accounting. Are there any othermethods that you would consider using in this particular situation? Explain the method(s) and show your calculations/analysis. Explain the pros and cons of all the methods that you have been asked to consider or that you recommend.

** Any and all help for this question is appreciated thank you!!